It is the second defeat in 13 Grand Slam matches for Emma.
The venue is Melbourne Park.
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The British number one was beaten in the second round of the Australian Open by Danka Kovinic, who had a troublesome blister.
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The 19-year-old showed remarkable resilience to fight back and win the second but eventually fell to a 6-3 defeat on Margaret Court Arena.
Kovinic is into the last 32 of a Grand Slam for the first time.
Kovinic made the third round of a Grand Slam for the first time after many years when he defeated Emma.
Emma won a Grand Slam at such a young age. She has an amazing talent. I'm so happy I could play that well.
I was low in energy through the third set so I tried to focus on myself and not show any emotion.
The Briton will surely have won more admirers for her gutsy display, as she had only lost one Grand Slam match before this meeting.
The teenager has been spending almost 12 hours a day on site to get her business done, which includes training, recovery, gym work, and then more recovery.
The extra work paid off as the perfect start by Raducanu resulted in a three game lead.
She looked like she was going to repeat her first-round meeting against Sloane Stephens, when she won the opening set without dropping a game, but she was taken to a deciding set for the first time in her Grand Slam career.
She will not have anticipated a blister derailing her progress.
After Kovinic had won two games, the British took a medical timeout for treatment on his hand.
Kovinic broke again to level and complete the comeback by winning five games in a row, after Raducanu double faulted on her return.
The resistance was shortlived as Kovinic closed out the set.
Despite the pain, raducanu digs in.
If Kovinic thought the second set would be the same as the first, then he had other ideas.
The teenager seemed to be effectively playing with just a backhand at times, jabbing and slicing on her forehand side to compensate for the pain as she opened a 3-1 lead.
The teenager will have to learn to deal with "ups and downs" according to the opponent.
After her adapted approach made it 4-2, she let out a huge "come on" and showed that she can learn on the job.
The world number 18 had a chance to extend that advantage with break point on Kovinic's serve, but the Montenegrin displayed tactical nous and composure of her own to hold.
Despite being grimacing with every forehand, he still managed to score two break points at 4-4 and convert a superb winner off the troublesome side.
The guile and desire that made her the first British woman to win a Grand Slam since 1977 shone through.
She shook her hand in celebration after she fended off two break-back points and took the second set.
The match lasted two hours 38 minutes and Kovinic came through in three sets.
Kovinic took a long bathroom break before the decider, no doubt wondering how she had failed to close out the match in two sets against an injured opponent.
On a hot day in Melbourne, where temperatures reached 30C, the Britons began to look fatigued for the first time as Kovinic converted her own to open a 3-1 lead.
Both players looked on as the crowd cheered a seagull that circled inside the arena, and it looked like a break from love for Raducanu.
Kovinic defeated her opponent in the final set.
She teed up two match points and although she watched the first scream back past her off a Raducanu forehand winner, she then found the corner with a backhand to cap a fine display and reach the third round of a Grand Slam for the first time in her career.